Obamacare: The Mandate And the Taxing Power

Oftentimes, the federal government finds itself wanting to promote a certain behavior as part of a national program, but without the direct power to do so. By way of example, in the 1980s, the Reagan Administration decided that it wanted the drinking age to be raised from 18 to 21 nationwide. But the drinking age isn’t a federal, but a state statute. In order to persuade states to raise the drinking age, the federal government passed an incentive plan. If a state failed to raise its drinking age to 21, it would find itself with a diminution in federal highway funding.

“The power to tax involves the power to destroy”, wrote Chief Justice John Marshall in 1819. With respect to the Affordable Care Act, or “Obamacare”, the power to tax also involves the power to build something. Under the law, beginning in 2014, Congress will require most Americans to obtain health insurance, or – if you don’t, you pay a fine to the government. The mandate was, ironically, a precondition set by the insurance industry, without which they would not be able to economically justify offering insurance to people with pre-existing conditions at no penalty.

Roberts turned first to the Commerce Clause (Article 1, Section 8), whereby Congress has the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Roberts rejected the argument that the government could regulate the absence of commerce; you cannot regulate that which does not exist. His analysis seems somewhat limited, however. After all, there is not a personal alive who isn’t engaged in the health care market now, or inevitably. Even if you’re not seeking medical care, you’re paying for others’.

Right now, you and I (and everybody) are taxed to help pay for uninsured people’s emergency room visits. ERs can’t turn people away, and oftentimes the poor and uninsured use them for primary care. Those hospitals seek reimbursement for the cost of providing those services through two Federal Programs, Disproportionate Share Hospital (DSH) and Upper Payment Limit (UPL)–that require a 50% local share match. So…instead of forcing the cost of health care provision onto the people who don’t have insurance, you (a taxpayer, or a person with insurance) are paying for them to get health care with both your federal and county tax dollars.

Secondly, Roberts turned briefly to the “Necessary and Proper” Clause, also in Article 1, Section 8, it reads, “The Congress shall have Power – To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” Roberts declined to go along with this, reasoning that…

Each of our prior cases upholding laws under that Clause involved exercises of authority derivative of, and in service to, a granted power. For example, we have upheld provisions permitting continued confinement of those already in federal custody when they could not be safely released…[t]he individual mandate, by contrast, vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power.

And so, the last resort – the “in the alternative” argument – was most persuasive to the 5 members of the Court who voted to maintain the ACA mandate. The very first Congressional power enumerated at Article 1, section 8 involves the power to tax and spend. Roberts wrote that Congress’ mandate isn’t the issue – it’s the “penalty” imposed on people who refuse to purchase insurance. While the dissent argued that the government is semantically blocked from calling the “penalty” a “tax”, Roberts argued that the word “penalty” assumes some sort of fine for illegality. Yet the refusal to purchase insurance isn’t illegal – it isn’t a crime. It is merely a choice, and a person’s choice to opt to pay a tax instead of buying insurance is one that government can regulate under its taxing power.

…the Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product…

…None of this is to say that the payment is not intended to affect individual conduct. Although the payment will raise considerable revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence conduct are nothing new. Some of our earliest federal taxes sought to deter the purchase of imported manufactured goods in order to foster the growth of domestic industry

Because Roberts invoked the taxing power, dumber pundits and lazy politicians have pivoted to calling it all – the whole law – a “huge tax”. Perhaps they should read the law, and then read the Court’s opinion. It’s not a “huge tax”. It’s a mandate that you have health insurance. Chances are, you already have it – it’s not like you’re being forced to buy super-more health insurance on top of what you may already have. And if you don’t have it, you’ll have much easier and cheaper access to health insurance. And if you choose not to have any at all, then you’ll be assessed a fine, a tax, whatever you want to call it.

The ACA’s “shared responsibility payment” is a tax only on people who choose not to hold insurance. Anyone who says otherwise is ignorant, mistaken, and/or lying.

With the mandate in place, no longer will the person without health care get away with not paying hospital bills, and no longer will taxpayers be “mandated” to subsidize those choices. Instead, the person making the choice to avoid insuring himself will be assessed a tax in the eventuality that he becomes ill and can’t afford to pay his bill. Do you want the person without health care to be taxed, or do you want to continue to be taxed because they don’t have health care?

In the olden days, “personal responsibility” was a conservative talking point. Now, we’re essentially codifying it through Obamacare – you’re responsible to get coverage, or for the consequences if you don’t. Now?

The remaining portions of the decision dealt with (a) the Court’s analysis of whether the issue was ripe for decision (it is); (b) whether striking the mandate meant invalidating the whole law (they didn’t have to reach it); and (c) a provision dealing with the expansion of Medicaid, holding that States can reject federal funding and therefore not comply with the new rules.

The misinformation and disinformation being spread over the last 24 hours has been simply mind-blowing. For instance, here’s a fundraising email that Republican congressional candidate Chris Collins (who, incidentally, never, ever has to worry about not being able to afford anything, ever, including health care) sent yesterday:

Dear friend,

The Supreme Court has confirmed what we already knew – ObamaCare is nothing more than a massive tax increase that will hurt hardworking families and continue to act as a wet blanket on economic growth and job creation.

Today, I’m asking for your donation of $27 dollars to protect the residents of the 27th Congressional District from this massive tax hike and help end ObamaCare.

I need your help to stop Kathy Hochul and Barack Obama from raising taxes on thousands of Western New York and Finger Lakes families.

$27.

$27 is how we can protect our families in the 27th Congressional District from massive tax increases.

When I go to Congress, my first order of business will be to lead the fight to repeal ObamaCare and replace it with common sense solutions that protect seniors and don’t crush small businesses and cost us jobs.

$27 can get us there.

Whether it’s $27, or $5, $10, $50 or $100 – anything you can do to help us stop Barack Obama and Kathy Hochul from raising taxes and cutting Medicare by $500 billion is so important. Will you consider donating today?

There’s so much at stake, and I need your help.

Sincerely,

CHRIS COLLINS

Congressional Candidate, NY-27

No, it’s not one side or another that won or lost – everybody won. Everybody will benefit from the implementation of Obamacare. It isn’t at all a huge tax increase, and the only reason Medicare funding goes down is because the ACA picks up the slack. Obamacare isn’t a “huge tax increase”, indeed it will help families by reducing the most common type of bankruptcy – ones brought about through medical expenses. Is this law a boon to insurers? Yes. That’s why many progressives didn’t like it much, and that’s why the law is something of a Frankenstein’s monster. But Obamacare, like its progenitor, Romneycare, is a fundamentally conservative idea. Because it’s been adopted by a Democratic President whom the Republicans are determined to ruin, it is now characterized as something it’s not.

And make no mistake – the Republican drive to ruin Obama is so concentrated and driven, that it doesn’t matter what collateral damage there is to average Americans, or the economy.

It’s not surprising to see a politician lie, but when mere puffery, (“I’m the best”), turns into brazen lying, (“I poop rainbows and spit unicorns”), you have to wonder what the politician thinks of the people who are going to vote for him. I heard some of our right-wing omniphobe media personalities liken the United States under the ACA to North Korea. There was heavy emphasis on “Hussein” yesterday, because “Hussein” is a foreign, Muslim name, and because somehow that correlates with socialism. Or something. I wish I was a professional psychologist so I could better analyze what was taking place. Even Mitt Romney noted that the Court didn’t hold that Obamacare was a “good policy”. That’s jaw-droppingly dumb – Palin dumb.

Requiring Americans to buy private health insurance from private corporations is socialist? Spreading the risk across most Americans so that health insurers can’t refuse to insure people with pre-existing conditions is like living in a Stalinist dictatorship with no market, no freedom, no food, no money, closed borders, and extensive gulags? How dumb. Almost as dumb as the many people who took to Twitter to decry the loss of America’s freedom and announce that they’d move to Canada, which has true single-payer socialized medicine.

Set aside the crazies and the liars – Americans won today. The ACA – Obamacare – isn’t a perfect solution. No solution is perfect, after all. But it will make our health insurance in this country more affordable, with better coverage, and no longer will you live at the mercy of health insurance companies, fearing arbitrary rate hikes, lifetime payout maximums, or being barred from buying insurance due to a pre-existing condition if you change your job. This is good for people.

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33 comments

It seems the opponents of the Affordable Care Act are either extreme partisans or totally ignorant of the reality of the law. Most fall into the latter, they have been confused by the very effective misinformation campaign waged by the right.

When liberals are defending the massive expansion of corporations at the expense of the working class, and conservatives are trying to defend a free-loader status quo, I would say no one knows what’s in the law or what the implications will be.

Here are the essential bits to me: the court voted 5-4 that the commerce clause doesn’t allow Congress to create commerce, only regulate it. That’s good. They also voted 5-4 that Congress can tax the absense of an action. Previously, taxable events were one’s of commission – they could tax you when you do something (smoke, make money, buy something, die). Or, they could give you a tax rebate when you do something (have kids, pay a mortgage, put in an efficient water heater). But they have stayed out of taxing not doing things. This is an expansion of the “nudge.” I am personally less happy about the implications of that.

I am disappointed by the ruling because I feel like it entrenches insurance comapnies that add no value to the system and are only a parasitic slice of profit. My wife, who works in health care, says that its a step towards single payer because as insurance companies get richer (like banks) the average citizen will get angrier. Maybe so, though Dems will be in a tough policy place denoucing it, then, as they reinforced the system.

I would love to be a fly on the wall when Obama and Roberts get ina room together. Obama voted against Roberts to be confirmed. Roberts messed up Obama’s oath of office. Now he’s handed him a second term. History will write books about those two together.

Liberals hoped for single payer, the only reasonable and cost effective way to deliver health care. I agree about the entrenched insurance companies, Obama was much too accomodating, shoul have fought harder for the public option. I work for one of the regions largest health care systems, I have over 30 years in facilities and engineering and I am responsible for a good size piece of the budget process. We are under constant pressure to do more with less and find ways to operate more efficently. I report to the COO, he and the CEO both advocate for single payer, they are certainly not liberals but recognize the limitations and high costs incurred under the present system.

When people start to realize that healthcare and access to healthcare
is a Right of the People, the conversation can start to move forward.
The ACA is a start, but doesn’t do enough. If you are in the category of people that say the tax aspect applies to people that are not doing something, as you said Brian, then what you are failing to realize is that we ALL use healthcare in our lifetimes. I’d like to meet one person who never used any part of the healthcare system in their life. I promise you, that person has a short life. Seeing as how most people are born in hospitals. For that matter, here at Roswell I see Mennonites all the time. And they eschew modern everything. The argument that you can not use healthcare in your lifetime is just patently false.

Ignorant of law is to have Congressional intent clearly say this is not a tax and then to vote to uphold the law as justifiable as a tax. Legislative intent is supposed to be part of the court’s review. Roberts clearly was looking to thread the needle…why, I have no idea.

And I’m sick those who say the court is partisan because of the Conservatives. When is the last time one of the liberal four voted in a way that people would say is out of character? They shouldn’t waste time even hearing cases because it’s obvious there mind is made up purely based on partisan, political considerations.

I think expanding coverage is a good thing and stopping free loaders makes sense. But I can’t get over the continued erosion of liberty, that Obama will force me to buy health insurance but won’t do his job and secure the borders….which means the all taxpaying citizens will be forced to subsidize the illegals in the emergency room, correct?’

Tell me, do you have health insurance now? And what does health insurance have to do with the border (and please describe to me in detail exactly how Obama isn’t “doing his job and securing the borders” any more or less than any Republican or Democratic predecessor? Has he dismantled the fence? Has he disbanded the Border Patrol? I am asking you for a specific, credible fact to illustrate your charge about Obama supposedly letting Mexicans and Central Americans into the country through the Southern border.

Love how you run to the racist rant. The point was Obama immediately said he would no longer work with Arizona once the Supreme Court upheld once piece of that immigration law while striking down the rest. The court ruled immigration enforcement is the federal government’s responsibility so enforce it. And are you saying that illegals do not take resources out of our social services and health care systems?

Issuing an Executive Order that is probably not legal that saying you will not deport those who are here illegally if they were brought here by their parents, etc. etc. might make sense if such a law were passed by Congress.

It appears Obama and his acolytes like you believe the ends justify the means on policy with no respect for individual liberty.

And Alan, you’re a lawyer so know about legislative intent. I see you chose not to address that. Obama and Congress clearly say this is not a tax and the Court upholds legality under ability to tax, ignoring legislative intent.

Maybe you should read the opinion. It’s linked to, above. Roberts covers it. The legislative intent was to impose a penalty. Roberts and the court interpret that to be a tax. If you can conceive of a way in which it isn’t, I’m all ears.

Tony, I’ll address the legislative intent for you. Since you mentioned the Conservatives on the Court, I’m sure you may have heard of the concept of textualism – which legal scholar and judicial conservative Justice Scalia is perhaps the poster-boy for. Scalia would take great issue with your statement that “Legislative intent is supposed to be part of the court’s review.” In fact he would say court’s should ignore legislative intent – that intent at all times is immaterial to interpretation and rather courts should look to the actual words of the statute and apply the meaning derived therefrom. A problem, he would say, with looking to legislative intent is that members of the court looking for the intent of a multi-member legislature could cherry-pick the intent of the legislator who best fits the Justice’s own interpretation. While words do have many meanings and may be interpreted differently by different justices – as may have occurred yesterday – textualists would argue that words are more precise than determining intent. And note the intent that we speak of is the intent of the legislature, not the bill’s writer.

Granted you have two other notable interpretive approaches – originalism (a cousin of textualism) and Breyer’s purposes and consequences approach. Under the purposes and consequences approach a judge would look to legislative intent as a guide, but more to determine the broader purpose of the statute.

Figuring out the legislative intent of 535 individuals (plus in your view every person in the administration that worked on it) is a tough thing to do. Figuring out what their intent was on every single sentence in a lengthy act is quite tougher. It’s probably best the court doesn’t take that approach. With any law.

There is absolutely no connection between health care reform and immigration policy. The fact that you have somehow connected the two issues leads me to believe that you are obsessed with the issue. Illegal immigration is not a major problem in this country, but it is a great issue to distract people.

I have no idea why you think the two Supreme Court cases have any connection to each other either.

I’m not connecting the two as matter of policies. I’m talking about the actual responsibilities of the federal government and living up to those. I’m referencing an approach endorsed by you and others that says if you think a policy is right for the country, you can use any means necessary to advance that cause, regardless of the long-term impact on liberty and the constitution. You are smart enough to recognize my point but you want to obscure it.

“The mandate was, ironically, a precondition set by the insurance industry, without which they would not be able to economically justify offering insurance to people with pre-existing conditions at no penalty.”

It’s only ironic if you ignore the fact that they’re being handed millions of new customers who are now forced to buy their products.

Also, this:
“Yet the refusal to purchase insurance isn’t illegal – it isn’t a crime. It is merely a choice,”

is legalese dissembling at best, dishonest at worst. Try to not pay your taxes, Alan, let’s see what happens. If you don’t buy insurance, your tax refund will go down. If your tax refund was going to be zero, they’ll garnish your wages. And see what happens if you find a way around that.

Yeah, it’s a choice between living outside Leavenworth or inside.

“In the olden days, “personal responsibility” was a conservative talking point. Now, we’re essentially codifying it through Obamacare – you’re responsible to get coverage, or for the consequences if you don’t.”

Are you seriously suggesting that the Federal government forcing us to do something has anything at all to do with “personal” responsibility? Isn’t that sort of the exact opposite of personal? Sorry, you’re reaching on this one.

I’d like to see any honest evidence you have regarding how it’ll make our healthcare more affordable. Everything I’ve seen contradicts that little problem, unless it’s just parroting CBO numbers (which by law have to go by what Congress claims in their predictions – we know those are always spot on right?). I mean, if we’re going to say “RomneyCare is the model”… then we might want to note Mass is paying more than ever…

Healthcare will be more affordable because no longer will the general public be required to subsidize losses providers incur offering mandated treatment to people unable or unwilling to pay. It will be more affordable because of volume – the pool of people buying insurance will grow, and at least in New York, the exchange has already been set up.

As to “legalese dissembling”, you should tell it to Justice Roberts, who wrote in the decision,

In distinguishing penalties from taxes, this Court has explained that “if the concept of penalty means anything, it means punishment for an unlawful act or omission.” United States v. Reorganized CF&I Fabricators of Utah,Inc., 518 U. S. 213, 224 (1996); see also United States v. La Franca, 282 U. S. 568, 572 (1931) (“[A] penalty, as the word is here used, is an exaction imposed by statute as punishment for an unlawful act”). While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. The Government agrees with that reading, confirming that if someone chooses to pay rather than obtain health insurance, they have fully complied with the law. Brief for United States 60-61; Tr. of Oral Arg. 49-50 (Mar. 26, 2012).Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. See Congressional Budget Office, supra, at 71. We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance…….Once we recognize that Congress may regulate a particular decision under the Commerce Clause, the Federal Government can bring its full weight to bear. Congress may simply command individuals to do as it directs. An individual who disobeys may be subjected to criminal sanctions. Those sanctions can include not only fines and imprisonment, but all the attendant consequences of being branded a criminal: deprivation of otherwise protected civil rights, such as the right to bear arms or vote in elections; loss of employment opportunities; social stigma; and severe disabilities in other controversies, such as custody or immigration disputes.By contrast, Congress’s authority under the taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more. If a tax is properly paid, the Government has no power to compel or punish individuals subject to it. We do not make light of the severe burden that taxation—especially taxation motivated by a regulatory purpose—can impose. But imposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice.The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.

Hopefully, that clears that up. As for “personal responsibility”, yes, the law requires you to personally be responsible for handling your health insurance affairs. It requires you to either be insured, or to pay a fine if you’re not. That way, it’s guaranteed that the health care provider will be compensated for rendering services to you. Personal responsibility.

If you have to do it or pay a fine (enforceable, in the end, by guys with guns), it’s not exactly a choice, now is it?

You are a meager suburbanite lawyer, I hardly expect your dissembling to be able to compete with the Chief Dissembler in the land. How telling is it that even a meager suburbanite lawyer can talk people into anything he wants.All research not connected to CBO numbers demonstrates the cost curve will not be heading down. I guess we’ll see in a couple years. I have decades of evidence on my side, you have Obama’s word that it’ll be cheaper.

How about I don’t like vegetables but I’m given the choice of carrots or peas? And even though I don’t want either the gov’t says I must pick. Your comment that “or” gives me a choice between two things is technically accurate but liberty means I should be able to choose neither.

Yet now, when uninsured people seek treatment at the emergency room, and my taxes – and yours – go to subsidize the extremely high cost of ER primary care treatment, the Republicans – and Romney – have absolutely nothing to say about that government-mandated confiscation of my money – and, by extension, an assault on my “liberty”.

This statute makes sure that people don’t freeload the system. Used to be personal responsibility was a conservative tenet. I’m glad to see that the Democrats have now co-opted that, along with all the other good ideas that the Republicans have shed in their 20-year plunge into regional relevance and fundamental irrationality.

Gotta love the Fox News graphic. Whereas the Supreme Court ruled that the individual mandate was constitutional under the federal government’s powers of taxation, Fox spun that into, “Supreme Court Rules Individual Mandate Will Become a Tax”.

Now the simple-minded mouth breathers that watch that channel will think an entirely new tax is on its way. Why not? They already think that Obama raised their taxes to give more welfare to poor people! Well played, Fox News.

1.
Medicaid?
If you are a single male forget it.
You don’t qualify now and you won’t qualify in the future. You are out of luck unless you have
kids. If you don’t believe me look it up.

2.
Insurance companies – Do you think they are
going to take money out of their pockets to cover the new patients with pre
existing conditions. Of course not! They will simple reduce the number of items they
cover i.e. no long cover transplants, or new expensive medical procedures and
of course they will probably reduce the percentage of their contribution
forcing the insured to now pay a 50% co-pay instead of a 20% co-pay.

3.
How exactly is this tax going to work. Who is going to collect it? The federal government, the state government
or is a new agency going to send you a bill if you don’t buy insurance. And if you don’t pay that tax bill are they
going to continue to add fines and penalties like they currently do with unpaid
taxes.

4.
Nothing in the law address the millions of
illegals who currently use the emergency rooms for everything from having
babies to the flu. The millions will
continue to tax our system as they are off our payroll records and off our tax
records. So those billions of dollars
will continue to be needed in addition to the trillions projected to implement
this new bill.